That is true; there is a lot of competition. That is why I really like designing websites better and selling them fully coded and whatnot. A lot more money to be made and less saturated market.
I started making websites about 5 months ago. Before that all I knew was the <center> html code. I started with some junk scripts from ebay and some lousy domains. Through these forums and others I learned what the basics were for success. This is just a hobby for me now in between my real job. But I am now making about $25 a day avg. just with adsense. So from my perspective it is easy now. But for the first month or two, It was maybe $5-$10 a month which I was happy with because I seen the possibilites. My goal now is $100 a day but I know that is some time off,so I think as long as you have your goals and don't expect to earn $1000's over night and just keep it realistic then it easy.
I think the best way to cure this is to find new niche out there, niche that u can penetrate without banging your head to the laptop... like math, look in your area, dozens of kids have this problems i want to ask you, is it too hard for anyone to setup a membership/portal based site that do e-learning stuff ? i think in any area, 50 kids with math problems is not a big deal to find you can charge up to $50 per head monthly, giving them tutorials and solutions of math online..maybe this niche is so fiercely saturated online but guess what, there's no ABSOLUTE ANSWER to problems...you can give them better service, they will hire you... offline marketing such as pamplets and brochures still works well , especially to non savvy internet user... i've done it and the results is staggering...what i've done is to put pamplets to selective home, especially to rich people who wants education for their kids..make it profesional and lovely, and do come to them face to face so that they will know you and trust you better...and the funny thing is, this method is viral especially when the kids SAW RESULTS ....others will be talking about you in your area and parents will start calling u to subscribe for their kids.. how's that for a start ? maybe tons of people are doing this but hey, this not about quantity but quality..
I have found the biggest reasons why I cannot make as much as I use to, is that there are too many restrictions by various search engines, which of course these restrictions were brought around by people who wanted a "get rich scheme" so bad, that they spammed the whole world wide web to only make a small amount, then kept doing it until they could quit their 9-5. This of course was then coupled to the fact that there are way too many "Illegitimate" websites out there today. Nothing bugs me more, than to come across a site, that is linked to another then to another and all of those sites have content that makes no sense in any language. I figure, to make money online now a days, do like me. Pack up, move to the Philippines and write unique content for others, while at the same time... Living like a king. -Nick